This November 14, the cheerful Allane and George Duffee will celebrate a happy 60 years of marriage.

As one of the first couples to move into Metlifecare's Takapuna retirement village The Poynton, they delight in the community they joined in July, 2009 but also like the privacy, and seclusion.

Best of all was knowing they were making only one move from a bigger family home to the vertical village, named after New Zealand's first Catholics, Thomas and Mary Poynton, who once owned the land.

At that village, the Duffees can be cared for, if needed.


"I've told them we'll be here at least 20 years," jokes George, showing off a plush three bedrooms with ensuites at the 123-apartment village, home to about 130 people, on the Taharoto Rd/Shakespeare Rd corner beside North Shore Hospital.

Downsizing to the luxury apartment was not a burden for the Duffees, happy to swap stairs in their Castor Bay home for a lift.

They now stroll across to the Smales Farm Bus Station.

"You're in town in 10 minutes," says Allane, who last appeared in a newspaper attending a 1950s rugby match at Eden Park.

They don't own the apartment outright, but instead have an Occupation Right Agreement, paying about $8000 annually for insurance, rates, water, repairs, maintenance and other services. When they no longer require the apartment, Metlifecare manages the refurbishment and the resale.

Retirement has big growth prospects. Over the next 16 years New Zealand's population of over 65s is set to double to more than 1.2 million.

The number of New Zealanders aged over 75 is expected to more than double from 250,000 to 516,000 over the next 20 years. In Australia it is tipped to double to 2.8 million.

The retirement village sector came into the spotlight this week for two reasons. Metlifecare announced a $216 million plan to buy its majority owner's retirement business and another from Goldman Sachs, which completed its strategic review and managed last year's capital raising.


And the Human Rights Commission pointed to chronically low pay rates for workers in resthomes as discriminatory and a breach of rights.

The Metlifecare deal appears to have come as a big surprise to investors who include AMP, Fisher Funds and Devon Funds Management. Chiefs were this week not saying if they would back it, only that they were considering it.

Fellow investor OnePath's Craig Tyson sees both sides and the deal got a favourable review from Macquarie Equities Research analyst Stephen Ridgewell, who called Metlifecare a sleeping giant and said the deal was "a merger made in heaven".

UBS analyst Wade Gardiner was more scathing, criticising a potential debt blowout and the $100 million borrowings carried by Vision Senior Living, which he said could raise total group debt to $189 million or more.

Institutions have favoured the larger Ryman Healthcare over Metlifecare, saying it offered more comprehensive care and was a better business model.

Institutional investors - holding long-term investments, such as KiwiSaver and other superannuation funds - are hungry for a slice of the retirement sector, seen as having huge growth opportunities in a rapidly ageing population.


Tyson sees the potential.

"I think institutions have been massively underweight in retirement over the last few years and have finally woken up to the growth and value of the retirement model due to Ryman's continued success," he said.

Talk circulated about Vision floating on the NZX last year but Tyson says Ryman, Metlifecare and Summerset fulfil professional investors' needs.

"I think three is probably enough given they will be developing around 800 units a year, which is approximately the annual demand in New Zealand based on currently low penetration rates of around 5 per cent," he said, referring to the low numbers of people who shift into retirement villages. Next week the largest retirement business, Ryman Healthcare, announces its annual result for the March 31 year.

Chief executive Simon Challies said Ryman was one of Christchurch's largest builders, putting up the Diana Isaac Retirement Village off Shirley's East Ellington Drive, where up to 500 people will live.

Since listing 12 years ago, Ryman has built more than 3850 retirement village units and aged care beds. It has invested more than $845 million, funded out of operating cash flows, while profits and dividends have grown 12-fold. Now it has a big investment in Australia.


Challies says big issues facing the sector are severe Government under-funding, pay rates and escalating demand for more intensive services.

The Government review of the aged-care sector identified a need for an extra 12,000 to 20,000 aged-care beds by 2026, equating to 800 and 1300 new beds annually, mainly for hospital and dementia care, he says.

Retirement village operations subsidise the far more expensive aged-care bed sector and Challies predicts more village developers will arise, drawn to the sector's more lucrative part and not offering full services.

Dwayne Crombie, BUPA chief executive, says the number one issue for the sector is staff.

"Aged care is fundamentally a people business but the Government created a gap between care in hospitals and the community when they hiked pay rates for the hospital sector," he said, citing a 20 per cent gap.

Lack of integration between public hospitals, aged residential care and GPs was another issue facing the sector, he said.


"The three bits of the system don't talk as much to each other as they should."

A third issue was poor real estate and difficulties generating returns to encourage big capital investment to upgrade rest homes.

"A lot of the old rest homes were never properly designed but just old houses which were modified and there's going to be a significant upgrade required," Crombie said.

Aged property, it seems, could be as big a problem as demands from our fast-growing ageing population.

Who's who
Ryman Healthcare
* NZ's largest retirement village owner/operator
* NZX listed, Christchurch-headquartered
* Chief executive Simon Challies
* 24 villages, almost 4000 units

* Aiming to take on Ryman and become a $2 billion business
* NZX listed, Greenlane-headquartered
* Managing director Alan Edwards
* 16 villages


* Originally British United Provident Association, established 1940s
* Took over Guardian Healthcare in New Zealand in 2007
* Unlisted, Auckland-headquartered. Support offices Auckland, Wellington, Tauranga
* Chief executive Dwayne Crombie
* 45 rest homes and hospitals, 16 villages

* Claims to be NZ's third largest operator, second largest developer of retirement villages and aged care facilities
* NZX listed, Wellington-headquartered
* Chief executive Norah Barlow
* 14 villages, one in South Island

Vision Senior Living
* 68 per cent owned by private equity funds managed by Goldman Sachs, the rest held by Arrow International Group shareholders
* Unlisted, but plans to merge with Metlifecare
* 5 villages, another 2 planned

Private Life Care Holdings
* Fully owned by Metlifecare, majority owner Retirement Villages Group
* Operating since 1985
* Unlisted but plans to merge with Metlifecare
* 3 villages in Auckland area

The Selwyn Foundation
* Retirement village accommodation, resthome, hospital and dementia care
* Community outreach services
* Only in upper North Island
* Seven villages, one of the largest charitable providers

Oceania Group
* Owned by Australia's Macquarie Bank
* Chief executive Guy Eady
* 58 retirement villages and rest homes nationwide


Radius Care
* Professional nursing care for more than 1400 residents
* Auckland-headquartered
* Chief executive/managing director Brien Cree
* Established in 2003 but has been in foreign hands for seven years In 2010, Cree led a management buyout
* 20 facilities